(Reuters) Wells Fargo & Co named banking veteran Charles Scharf as chief executive officer on Friday, the lender’s third CEO since a wide-ranging sales scandal erupted three years ago.
Scharf will take over from interim CEO Allen Parker, who was thrust into the position in March when former CEO Tim Sloan resigned abruptly. Sloan had said increased pressure from politicians and regulators had become a distraction in running the scandal-plagued bank.
Scharf will take charge at a time when the bank is under a regulatory microscope and is working at rebuilding its tarnished reputation following the scandal.
Internal and regulatory probes since the scandal have uncovered other issues in each of the bank’s primary businesses, resulting in billions of dollars in fines, penalties and an unprecedented cap on its balance sheet by the Federal Reserve.
Wells Fargo’s board has been shuffled many times since the scandal, with more than half of its independent directors joining the board after 2016.
Most recently, Scharf was heading Bank of New York Mellon (BK.N). Before joining the custodian bank, he held the top job at Visa Inc (V.N), the world’s largest payment network.
Separately, BNY Mellon named finance head Thomas Gibbons as its CEO on an interim basis. The bank also said Scharf had forfeited all of his equity and incentive awards which were unvested as of Thursday.
KBW analyst Brian Kleinhanzl said he was unsure what to expect from Scharf as Wells Fargo’s CEO since his tenure at Bank of New York Mellon lasted only for two years.
“Scharf’s first task will be appeasing regulators and making the changes necessary to remove the asset cap currently in place,” Kleinhanzl said.
Scharf, 54, started his career in 1987 at Commercial Credit Corp, a consumer finance company run by Jamie Dimon and Sandy Weill - executives who went on to lead two of America’s biggest banks.
He was named Dimon’s assistant six months into the job at Commercial Credit, according to an alumni magazine for the NYU stern business school.
Scharf will start in his new role next month, Wells Fargo said in a statement.
“He moves from a bank with far less retail business than Wells Fargo, so he will face a steep learning curve,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.
The lender’s board had considered keeping Parker as CEO on a permanent basis even after saying they would seek an outsider to fill the role, sources had told Reuters in June.
Wells Fargo said Scharf’s base salary at the bank would be $2.5 million - nearly the same as Sloan’s base pay in 2018.
Regulatory filings showed that Scharf’s total compensation for 2018 at BNY was $9.4 million. Sloan’s total compensation for the year was $18.4 million.
Shares of Wells Fargo were up nearly 3.2% at $50.44 in premarket trading.
